The Tough Money Love “Can I Afford it?” Quiz

December 21, 2008 by  
Filed under Spending

Karen Datko over at the Smart Spending blog tipped us off to a nice summary published by the Strump of ten ways to tell if you can afford it.   The Strump’s list is excellent as far as it goes but Mr. ToughMoneyLove is now inspired to administer the second part of the affordability quiz.

So here are ten Tough Money Love ways to know when you can’t afford to buy something:

1.  If your credit score just moved higher than your net worth and you’re still celebrating, you can’t afford it.

2.  If you worry about whether your paycheck or your rent check will win the race through your bank account, you can’t afford it.

3.  If you have to pause before the purchase to consider which of your credit cards is still under the limit, you can’t afford it.

4.  If you are counting on an income tax refund to balance your budget, you can’t afford it.

5.  If your employer needs TARP funds to make payroll, you can’t afford it.

6.  If you can’t afford health insurance, you can’t afford it.

7.  If you are justifying your spending as being patriotic, you can’t afford it.

8.  If you spent your Christmas bonus in November, you can’t afford it.

9.  If you are a pension-less baby boomer living in fear of your 401(k) statement, you can’t afford it.

and finally,

10. If you asked Santa to bring you money for Christmas, you can’t afford it.

By the way, even if you pass this quiz, before you make the purchase – check for the ten warning signs of a normal financial life.

Thanks again to Karen Datko and to the Strump for motivating me to put these key affordability tests in print.  I truly hope that you can pass all of them.

Image credit:  Kostya Kisleyko

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10 Responses to “The Tough Money Love “Can I Afford it?” Quiz”
  1. My little addition.

    11. If you can’t pay for it with cash, you can’t afford it.

  2. Wise – Agreed but I hope that I didn’t need to say that!

  3. Bill M. says:

    You can’t make it more complete.

  4. kitty says:

    Good. A couple of comments:
    9. “If you are a pension-less baby boomer living in fear of your 401(k) statement, you can’t afford it.”
    I don’t agree with this one. There are a lot of baby boomers who are afraid to look at their 401K this year not because they don’t have enough money but because they have considerably less money than they used to and they are scared to find out how much less. The more money you have in 401K the larger the losses. Even with recommended 100-age allocation.

    10. Well… I certainly would like Santa to bring me a few million dollars so I could buy an apartment on Central Park West. At the very least how about 150K I lost? Does it mean I couldn’t afford a transatlantic cruise I just came back from even if I cash-flowed the complete thing? Wow, I am heartbroken.

    Seriously, passing the quiz doesn’t mean one can afford something. In general having cash to buy an item doesn’t mean one can afford it. Having the money is necessary, but what you plan to buy vs how much time it takes you to save for it is important as well. In some cases just a mere fact that you need to save money to buy something means you can’t afford it. E.g. I can easily afford to spend $3000 or more for a vacation; I cannot afford to spend $1000 for a single meal. An extreme example would be one guy who called Suze Orman once asking to spend most of his savings on a Ferrari. He had cash, but he still couldn’t afford it.

  5. MasterPo says:

    What if *I* need TARP money?! (LOL!)

  6. G. Jules says:

    12. If buying it means cashing out your emergency fund… and it isn’t an emergency… you can’t afford it.

    (I pass all ten of those, and I could theoretically take the money in my emergency fund and go to Paris. But it’d be a stupid decision.)

  7. Andrea says:

    I tagged on over at my site. :)

  8. This is hilarious. Love your Top Ten on this!!!

  9. TStrump says:

    Great follow up to my original post!

  10. Kitty: I guess my point is that if you are in doubt already, if you answer yes to one of these questions, you should resolve the doubt against spending the money.

    MasterPo: If you received TARP funds, could you pay it back?

    G Jules: Agreed to your no. 12

    Andrea: Thanks.

    Beef: Thanks for the kind words.

    Tom: Credit to you for starting this list!

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